Translate a theoretical quantity into an order a supplier can accept.
Beginner-friendly animated guide
Learn EOQ with MOQ and pack-size constraints from the beginning
Translate a theoretical quantity into an order a supplier can accept. Use the controls to study one section at a time. No previous warehouse knowledge is required.
Annual ordering cost is annual demand ÷ order quantity × cost per order. Annual holding cost is order quantity ÷ 2 × annual holding cost per unit. The basic model assumes steady demand, constant unit price and no quantity discounts or shelf-life constraints.
Worked example
Annual demand 1,200, order cost ₹100 and annual holding cost ₹24 per unit give EOQ = √(2 × 1,200 × 100 ÷ 24) = 100 units. With MOQ 25 and packs of 12, compare 96 and 108. Their relevant annual costs are ₹2,402 and approximately ₹2,407.11. Under these assumptions, choose 96.
A constraint can dominate
If the MOQ becomes 110, the smallest feasible pack multiple is 120. Simply replacing EOQ with MOQ would return 110, which is not a multiple of 12. The calculator respects both constraints.
Before placing the order
Check shelf life, storage, cash, open orders, discounts and supplier calendar. Use the cost comparison as a planning input, not an automatic purchase instruction.
A buyer orders the supplier minimum even when it creates more stock than the demand cycle needs. The useful response is not a generic target or a tick-box answer. Start by defining the exact event, location, item, time period and decision owner so that another reviewer can reproduce what happened.
Decision path
Calculate economic order quantity, then separately test pack size, MOQ, shelf life, cash and capacity constraints. Record assumptions before changing the process. Compare the proposed control with the current condition, test it on a limited scope where appropriate, and define the condition that would require work to stop or management to escalate.
Evidence pack
Demand basis, order cost, holding-rate basis, supplier constraints, scenario comparison and approval. Keep the source record with the action rather than copying only a summary into a presentation. A complete pack should show who reviewed the information, what was excluded, the date of the decision and proof that the action was later checked.
Supervisor walkthrough
Observe the work at the location and ask the operator to explain the normal sequence.
Compare the observed sequence with the written standard and system record.
Separate an isolated exception from a repeated condition by checking recent history.
Agree one immediate control and one corrective action with a named owner and realistic date.
Return after implementation and verify the result with evidence, not verbal confirmation.
Common failure to avoid
Do not close the review with “team advised” or “monitor closely.” Those statements do not identify a changed control, accountable owner or effectiveness check. A useful closure states what changed, where it changed, when it was checked and what result would reopen the issue.
Method and verification
This lesson is an operational decision aid. Reconcile definitions to your contracts, system fields and approved local procedure. See the calculation and evidence method.
